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Beset by new competitive reality, firms typically start to focus on better asset management (reduction of working capital) as well as in reduction of investment requirements by selective outsourcing. However, vitality in the medium to longer term comes not from asset reduction but from resource leverage.

Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.

If you are planning for one year, grow rice. If you are planning for 20 years, grow trees. If you are planning for centuries, grow men.

Strategy is not the consequence of planning, but the opposite: its starting point.

What is the aim or purpose of strategy? To improve our ability to shape and adapt to unfolding circumstances, so that we (as individuals or as groups or as a culture or as a nation-state) can survive on our own terms.

The first strategy of war is an armed force that is fully mobilized and consumed with the desire to win. Without that, all other strategies are vain.

Strategy gets you on the playing field, but execution pays the bills.

Strategy is indivisible. Remove one part or take away the bridges and the glue that ties the parts together and you don't have strategy, but tactics. Tactics are the elements that relate to the execution of the strategy. Those elements are discrete and divisible and can be examined and evaluated separately.

A general must see alone and know alone, meaning that he must see what others do not see and know what others do not know. Seeing what others do not see is called brilliance, knowing what others do not know is called genius. Brilliant geniuses win first, meaning that they defend in such a way as to be unassailable and attack in such a way as to be irresistible.

What I've noticed about the really good companies is that the leadership narrows the business model down so that people can see it and make use of it. They can get a sense of direction. They're all on the same page . . . What we're seeing in the Speed Economy is the death of the consensus approach to strategy - the approach of the Unilevers of the world, the Shells, the Japanese. These companies were terrific at mobilizing people to reach a consensus and then act. But we don't have time for that anymore. So I think the good leaders today present very clear, narrow business models.

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No more than 10 or 15 percent of innovations move up to that founder's wishes. Another 15, 20, or 30 percent are not disastrous, but not successes either. Five years later they'll say that this is a nice specialty. You know what that means, don't you? It means you have to wrap it in a five-dollar bill to give it away. Sixty percent are footnotes at best. Timing is also important. An invention may not succeed, but 10 years later someone else does the same thing, but gives it a slight twist and it clicks. Sometimes strategies are more important than the innovation itself. The trouble is that you rarely get a second chance.

Managed learning is a more efficient and effective means of achieving the strategic agenda that leverages the natural dynamics of organizational change and knowledge creation and use.

Strategy without process is little more than a wish list.

In McKinsey's world, all of life is one of two things: strategy or organization.

The major argument for value innovation is that it tends to be far more profitable than "me too" launches or the introduction of products that claim marginal improvement on the original. While the latter categories make up some 86% of overall new product launches, they only account for 62% of increased revenue and 39% of increased profits. Meanwhile value innovations, which only represent 14% of overall new product launches, represent 38% of increased revenue and 61% of increased profits.

There are two things to be considered with regard to any scheme. In the first place, 'Is it good in itself?' In the second, 'Can it be easily put into practice?'

All inquiry, whatever its subject, has as its final object the matter of how to go about living.

Competitive advantage is a function of two variables: the amount of customer-valued differentiation between what your company offers and that of its direct competitors, and the sustainability of that differentiation over time. The greater the difference and the longer you can sustain it, the more attractive your prospects for creating above-average returns for investors.

From an investor's point of view, any business process that creates additional differentiation, or that contributes to increasing the staying power of the differentiation currently achieved, is core. Investors want you to spend their capital to improve your stock price. By contrast, all the other business processes in your company are context--critical to run your business, but not related to creating or maintaining competitive differentiation. Investors don't want their capital to underwrite these efforts because they can't improve the stock price.

So how does context work ever get funded? Investors say to expense it, not to invest in it. That is, it's OK for them to see noncore spending on your profit and loss statement, they just don't want to see it on your balance sheet.

...Competitive differentiation on context is actually a liability. It requires financial and human capital to create and maintain, without increasing shareholder value.

In the long term, the best way to manage context processes is to turn them over to another company. This is the inherent logic of outsourcing--whether the processes are IT functions, manufacturing processes, payroll processing, or any other function.

If you list all the context processes in your company, you'll quickly note that many are crucial while others play a supporting role...Most managers conclude that the company simply can't risk outsourcing a critical process. That conclusion, however, inevitably leads to a slow but inexorable decline in stock price. More of the total assets get tied up in processes that can't produce a competitive advantage and therefore can't improve the company's prospects for increasing future earnings.

...In this new world, the mnemonic for ensuring that you focus on the right variables is QRSTUV, which stand for: Quality, Reliability, Scalability, Total cost of ownership, User control, and Visibility.

Today, for the most part, such control systems for business don't exist. Instead, both outsourcers and their customers throw human intervention into the mix, leading to a deterioration of the value proposition at both ends.

Our strategies must be tied to leading-edge customers on the attack. If we focus on the defensive customers, we will also become defensive.

Unless the distant goals of meaning, greatness, and destiny are addressed, we can't make an intelligent decision about what to do tomorrow morning -- much less set strategy for a company or for a human life. Nothing is more practical than for people to deepen themselves. The more you understand the human condition, the more effective you are as a businessperson. Human depth makes business sense.

Your threats and opportunities increasingly derive from whom you are connected to.

The war analogy we have used for strategy so far is the wrong one: It is based on an assumption that there's only so much territory that exists. So it's been about dividing up that territory. There's been a winner and a loser. But our research shows it's not a zero-sum game. You can create new land. Business history shows us that, contrary to perceived wisdom, the number of market spaces that can be created is infinite.

Once you have your own market space and imitators follow, you go into classical competitive strategy mode, where you focus on milking it, getting your best market share, blocking other imitations and dramatically ramping up and refining your offering. But, as other companies' strategies converge on your market, history shows you need to create new market space again and break away.

Putting a slow-growth company on the track to double-digit growth requires senior executives to reckon with new ideas about serving customers and deploying assets. It also requires them to set aside old ideas about growth that no longer apply. One such outmoded idea is the notion that new growth invariably comes at the expense of the core business. In fact, just the opposite is true: A company that wants to develop a new-growth strategy must start by reinforcing its core business. After all, it's your core business that creates access to higher-order needs. If you don't have a competitive product to sell, you have no related needs to serve.

In normal times, four boundaries limit the scope and nature of a company's business: regulations, competition, customers' attitudes, and the organization's ability to change. In times of crisis, however, the boundaries often shift dramatically, and those shifting boundaries can become the means through which companies improve their competitive position.

Because analysis is not synthesis, strategic planning is not strategy formulation... ultimately the term strategic planning has proved to be an oxymoron.

When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides.

Often the term "business model" is used more or less synonymously with "business strategy." For example, Adrian Slywotzky describes it as "the totality of how a company selects its customers, defines and differentiates its offerings (or response), defines the tasks it will perform itself and those it will outsource, configures its resources, goes to market, creates utility for customers, and captures profits. It is the entire system for delivering utility to customers and earning a profit from that activity."

Our view is narrower than this. Quite simply, a business model refers to the core architecture of a firm, specifically how it deploys all relevant resources (not just those within its corporate boundaries) to create differentiated value for customers.

I don't think scale is the key, even though it's much talked about. Global scale doesn't give you the right to go into a country and make money. There's plenty of evidence of that. Capabilities are more important than scale. That's because value comes from serving customers well, which means that most of the added value is added locally.

[Sticking to "core competencies" is] dangerously inward-looking. Competitiveness is more about doing what customers value than doing what you think you're good at.